NEW YORK — Retailers can choose two ways to enter a market — slowly or with a bang.
Wal-Mart chose the latter strategy for its foray into Canada when it announced last month that it was acquiring 120 Woolco discount stores from Woolworth Corp.
According to Randy Harris, a partner in Kormos, Harris & Associates, a market research firm in Toledo, Ohio, Wal-Mart is taking over a chain that is the fifth-largest apparel retailer overall in Canada, and the second-largest discount retailer of apparel in that country.
Woolco accounts for 17 percent of the total discount apparel market in Canada. It trails Zellers, which has 38 percent, and is closely followed by Kmart, which has a 15 percent share. Broken down further, Woolco accounts for 17.7 percent of women’s apparel sales among discounters, 17 percent of men’s, and 15.1 percent of the juvenile apparel market.
According to Harris, Wal-Mart’s impact on other Canadian discounters will not be so much in the price arena — many competitors have already begun lowering prices in anticipation of Wal-Mart’s arrival — as in back-room operations.
For Canadian operators to compete successfully against the discount giant, they will have to improve sourcing, distribution and information systems — areas where they lag considerably behind Wal-Mart, Harris said.